Scotiabank holding on to TBank

Bank of Nova Scotia (Scotiabank) is still committed to a long-term investment in Thanachart Bank (TBank), a top executive of the parent firm says.

The remark is an indication that the Canada’s third-largest lender by assets has terminated its plan to exit the Thai market.

TBank last year provided Scotiabank over 10 times in returns on equity. TBank’s ability to retain its leadership in Thailand’s car hire purchase market also falls in the bank’s favour, Suphadej Poonpipat, Thanachart Capital (TCAP) vice-chairman and chief executive said.

TCAP holds a 51% stake in TBank and the Canadian bank owns the rest.

TBank delivered almost 16% in net profit growth, to 12.4 billion baht in 2016 from 10.7 billion in 2015.

His comment confirmed Bangkok Post’s earlier report, which referred to a source in the banking circuit saying Scotiabank had shelved plans to partially or wholly sell its stake in TBank.

The Toronto-based bank was reported as saying in December 2015 that it was mulling selling part or all of its stake in TBank in compliance with its policy to focus on expansion in Latin America.

According to a Reuters report, the Canadian bank had approached a unit of Bank of China (Hong Kong), Maybank and two Japanese banks to gauge their interest in the stake, while Morgan Stanley, which was hired by Scotiabank as an adviser for the shares sale, also approached Taiwan’s Fubon Financial Holdings, Japan’s Mizuho Financial Group and Sumitomo Mitsui Banking Corp, a unit of Sumitomo Mitsui Financial Group.

Mr Suphadej said Scotiabank has only exited countries where its shareholding in financial institutions was not significant, while TBank is the Canadian bank’s second largest investment.

The Toronto-based bank held a 24.98% stake in TBank in 2007 before raising its holding to 49% in 2008.

Mr Suphadej said that Scotiabank’s recent approach of other institutions for potential share sales in TBank was only aimed at measuring the Thai bank’s goodwill value.